Challenge to the Initial Rent for Residential Premises in an Old Building

Facts

Landlord A. AG rented a 2-room apartment in V. to Tenant B. effective April 16, 2017 for a monthly net rent of CHF 1,060.- plus an advance payment of CHF 165.-. The previous net rent was CHF 738.-. The tenant applied to the Conciliation Authority to have the initial rent declared abusive. The Zurich Rental Court declared the rent of CHF 1,060.- as abusive and set it retroactively at CHF 855.-. The landlord appealed to the Federal Supreme Court.

Considerations

The Federal Supreme Court clarifies its case law on the burden of proof in challenging the initial rent:

- In the case of a massive rent increase of clearly over 10%, which cannot be explained by the development of the reference interest rate or the consumer price index, there is a factual presumption of abuse. The landlord must then raise justified doubts about the correctness of this presumption.

- To raise justified doubts, it is sufficient for the landlord to submit, for example, statistics or several comparable properties, even if they do not fully meet the requirements of the VMWG. The standards of…